Contingency plan

sleep peacefully

Published in El Pais, 17 November 2020.

Nobody likes pessimists. People who during the break or in any other conversation talk about the worst that can happen are not welcome. What are we going to do if the project is not successful, what to do if we go bankrupt, what are you going to do if you lose your job, etc.? Generally, people are optimistic, and we do not like the possibility that something could go wrong. People who manage projects, surely know that estimates in time and money are always too optimistic, and for some reason we increase with a margin our budgets. It is not that they are pessimistic, but that they know that something always will go wrong.

Today, the COVID-19 crisis has taught us that even the least likely can happen. If someone a year ago said that a global epidemic could cripple the entire world’s economy, they would have been ignored and declared insane and paranoid. We have been very spoiled these last 10 years, and nothing would have made us think that something extreme like COVID-19 could happen.

Now, having some pessimists on your team is worth it. Ignore them to decide not to do a project but listen to them to manage the risk of the project. What is always useful is to make a list of everything that can go wrong during a project, classify it by probability of occurrence and plan its management. For example, the probability that the competition will come up with a comparable product is more likely than that a meteorite will destroy the entire factory. Then we define the impact of each event. How this event affects our sales, profits, etc. If the combination of impact and probability is high, it is worth taking steps to reduce it. If it is not that high, plan to handle it. And those that have less impact and less probability, well I always say, we deal with it when it happens.

Managing your business or your family finances is easier if you think about risks from time to time and how to face them when they occur, or how to prepare to face them. The peace of mind of knowing that you are prepared is worth it.

About Arnold Hagens 296 Articles
Arnold Hagens is Economist with strong interest in technology, health and coaching

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